Cabinet ministers have been told to make sure Government contracts go to companies that will boost British jobs.
Rachel Reeves and Pat McFadden have told their Cabinet colleagues to “ensure the creation of British jobs, productivity-enhancing opportunities, and skills are prioritised in every major contract”.
The Chancellor and the Cabinet Office chief said the hundreds of billions of public spending on roads, railway lines and hospitals promised over the next decade are an opportunity to deliver more British jobs.
They also urged ministers to make efforts for their departments to direct more spending to smaller businesses and social enterprises and reduce barriers that are hindering them as they compete with established bidders.
They wrote in a letter to Cabinet ministers: “We want people around the UK to feel the full impact of government spending through investment in skills and high-quality jobs.
“That’s why we’re going further to ensure public procurement expenditure boosts British industry, jobs, skills, productivity, and expands the supply side.
“Every department needs to be pulling this procurement lever to support economic growth and strengthen our economic security. It is possible to do this within our trade agreements, as other countries do.”
It comes after Mr McFadden, the Chancellor of the Duchy of Lancaster, proposed an overhaul of public procurement rules last month that would mean public bodies have to give more weight to firms which can prove they will boost British jobs when they are bidding for contracts.
The change is set to apply to major projects such as transport, as well as other schemes including hospital and school building.
“We are asking all secretaries of state to satisfy themselves that your department, and arm’s-length bodies, have the commercial capacity and capability to ensure the creation of British jobs, productivity-enhancing opportunities, and skills are prioritised in every major contract,” Mr McFadden and Ms Reeves wrote.
They also told Cabinet colleagues to “set ambitious and stretching targets for increasing your procurement spend with SMEs and social enterprises while stripping away requirements and processes that are barriers to these firms competing with established players”.
They said commercial teams within departments are not a “back office function” but a “strategic policy lever” and “must be a priority”.
